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A welcome sea of green has flooded its way back to the meandering ASX this week, just in time for the corporate types of the resources sector to descend upon the annual Diggers and Dealers forum in Kalgoorlie.
Gold was well and truly back on the menu at Diggers following US Treasury Secretary Scott Bessent’s claim Washington was just days away from striking a deal with Iran to reopen the Strait of Hormuz…..yes, again! The result was a rally for markets as the mere suggestion was enough to send gold soaring 5 per cent and oil tumbling nearly 10 per cent to below US$80 a barrel on the prospect of middle east oil flowing freely again.
Even North Korea’s own little rocket man couldn’t derail the rally. Apparently feeling left out, Kim Jong Un lobbed a couple of his own rockets into the Sea of Japan, seemingly reminding Japan he wasn’t thrilled about their renewed defence ambitions. bottle
The ASX joined the party too, surging an impressive 3 per cent to fresh record highs after spending the better part of the past year grinding sideways, as the AI-fuelled globally rally largely bypassed the local market.
The AI trade has finally shown cracks this last month and it was always going to happen. After years of chipmakers and hyperscalers doing the heavy lifting, investors are starting to bank profits and rediscover Australia’s beaten-up resource stocks.
The street talk around Kalgoorlie was palpable. And a raft of Aussie gold’s mid-tier got on their bike in a serious way.
One of the better quotes in conference history came from Benz’s chief executive officer Mark Lynch-Staunton, after he said: “Last year I stood on this stage and said that Glenburgh deposit could be the next Hemi ($5 billion gold takeover). I was wrong, because a Hemi discovery is most likely just the beginning for us. It’s only a starting point. We believe Glenburgh has the potential to become one of Australia’s legendary gold discoveries. A vast new gold district.”
Despite the goldies dominating the headlines this week, the Bulls N Bears Runners list is surprisingly devoid of the shiny yellow metal. Instead, it’s a healthy mix of healthcare, telecommunications and copper juniors in what was a ripping week for the ASX – if not quite as much for the smaller end of town, which continues to struggle a little for attention.
The Bulls N’ Bears Runner of the Week is Melbourne-based consumer healthcare and wellness producer Wellnex Life, after it agreed to sell its Pain Away medicinal cream brand for up to $21.3 million in cash, a transformative deal that sent its share price soaring.
The company says the deal will see it become debt-free and undertake a reset, with Wellnex to receive $19.8 million upfront from Mentholatum Australasia, a subsidiary of Tokyo-listed Rohto Pharmaceutical and an additional $1.5 million through an earn-out linked to post-completion earnings targets.
Wellnex plans to use the proceeds to fully repay approximately $10.2 million of secured and unsecured borrowings, wiping its slate clean, as the deal lifts a sizeable financial weight from its shoulders and leaves it with something many small caps can only dream about — a healthy cash balance and a clean slate.
Wellnex says the proceeds will fund working capital, expand its retained soft-gel analgesics and capital-light contract manufacturing business, while also giving it the firepower to chase acquisitions of established consumer brands or even return some capital to long-suffering shareholders, a most unusual occurrence.
By cashing out Pain Away — a business that generated $13.38 million in revenue and $4.36 million in EBITDA last year — Wellnex has brought forward its cashflow.
Management will no doubt be relieved the cheques are in the mail, with shareholders now waiting to see whether the war chest funds the next growth story… or finds its way directly into their pockets.